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Aug 12 2022
Finance: stocks, options, etc.
By:
Scott Sumner
The Fed often explains the monetary policy transmission mechanism as follows: Tighter money results in more restrictive financial conditions. This reduces the growth rate of aggregate demand, and eventually slows inflation. Now let's suppose that the Fed is expected to achieve its goal of slowing demand at exactly th...
Aug 12 2022
Public Choice Theory
By:
David Henderson
In my short note that I inserted into Kevin Corcoran's recent thoughts on the political system, I pointed out that although there is strong overlap between the rich and the politically powerful, they are not the same. This requires elaboration. The best way to do it is to come up with counterexample...
Aug 11 2022
Foreign Policy
By:
Scott Sumner
I often wonder how much our view of political institutions is shaped by Hollywood films. For instance, when you look at various times that President Trump got into hot water, they were often occasions when he seemed to assume that things in government are done the way they are portrayed in the movies. He didn't seem ...
Aug 11 2022
Labor Market
By:
Walter Block
If you ask a good freshman student in Economics 101 what is the cause of a shortage, you will get a quick answer, almost but not quite by rote: demand is greater than supply and for some reason, price has not risen so as to stop the shortage. That is it. That is it in a nutshell. Not much more need be said: shortages a...
Aug 10 2022
Macroeconomics
By:
David Henderson
A friend on Facebook writes: Many in the MSM (mainstream media) will lie to your face. Be discerning. Prices rose 8.5% year over year in July. That is NOT a significant slowdown. If you only lost 1/12th of your money since last July, that really is not an improvement in circumstance after losing 1/11th of your money s...
Aug 10 2022
Law and Economics
By:
Pierre Lemieux
We must of course remain vigilant that laws not be used to harass or destroy political opponents. A Wall Street Journal editorial of this morning says as much. But this is not a reason for rulers or former rulers to be above the law like dictators. The fear of Leviathan---the all-powerful state modeled by Thomas Hob...
Aug 10 2022
Government Growth
By:
David Henderson
Kevin Corcoran, a regular reader, has yet again sent me an interesting basis for a blog post. Here's Kevin: Senator Bernie Sanders once tweeted: Say Bill Gates was actually taxed $100 billion. We could end homelessness and provide safe drinking water to everyone in this country. Bill would still be a multibillio...
Read this Scott Sumner Book Review:
Nov 2 2020
Book Review
By Scott Sumner
A Book Review of Strategies for Monetary Policy, John H. Cochrane and John B. Taylor, eds.1 Each year, the Hoover Institution hosts a conference on monetary policy at its Stanford University headquarters. The conferences bring together academics and Fed officials to discuss issues in monetary economics. The pr...
Aug 9 2022
Macroeconomics
By:
Scott Sumner
Bloomberg has an article discussing the prospects for the economy going forward. One pessimistic pundit cited this survey of small business sentiment: At first glance, the recent drop looks worrisome. But then I looked at the entire graph. What do you notice? There seems to be almost no relationship between sm...
Aug 8 2022
Liberty
By:
Scott Sumner
Back in 2020, Marc Andreessen wrote an excellent critique of NIMBYism entitled "It's Time To Build". Here's an excerpt: You don’t just see this smug complacency, this satisfaction with the status quo and the unwillingness to build, in the pandemic, or in healthcare generally. You see it throughout Western life, an...
Aug 8 2022
Liberty
By:
Pierre Lemieux
The adoption by the State of Indiana of a law restricting abortions offers an opportunity to review some economic, or economically-inspired, arguments on both sides of the debate (“Indiana Passes Near-Total Abortion Ban, Marking First State Restrictions Since Roe v. Wade Overturned,” Wall Street Journal, August 6, ...
Aug 8 2022
Cost-benefit Analysis
By:
David Henderson
More correctly, they understand Covid tradeoffs for themselves. “Senate Democrats, some of whom have decried their G.O.P. colleagues’ lenient attitude toward masking, have adopted an unofficial ‘Don’t Test, Don’t Tell,’ protocol of late, particularly as they endeavor to pass the historic Inflation Reductio...
Aug 7 2022
Business Economics
By:
Jon Murphy
On July 25th, the ice cream company Klondike discontinued the Choco Taco, one of their popular novelty ice cream treats. Fans were disappointed. The Choco Taco has been a staple of Klondike’s offerings for almost 40 years now. By all accounts, the product was popular and profitable. So why the decision from K...
Aug 7 2022
International Trade
By:
David Henderson
Don Boudreaux, over at CafeHayek, quotes Roger Scruton's criticism of the "globalized form" of the free market. Here's the quote: Although I’m very much in favor of the free market, I’m very suspicious of the globalized form of it, and the way in which it does not respond to the demands of local communities and ...
Aug 6 2022
Central Planning
By:
Aashay Dwivedi
Two thousand years ago, the proudest boast was civis Romanus sum ["I am a Roman citizen"]. Today, in the world of freedom, the proudest boast is "Ich bin ein Berliner!"... All free men, wherever they may live, are citizens of Berlin, and therefore, as a free man, I take pride in the words "Ich bin ein Ber...
Aug 6 2022
Business Economics
By:
David Henderson
Regular reader Kevin Corcoran has sent me yet another short essay, this time on why requiring that all charging cables comply with the same standard is a really bad idea. I particularly like his last paragraph, which really drives the point home by asking us to imagine what would have happened had such a standard been ...